Chapter 60 Appendix 4 The Application of Abstract Reasoning in Economics

There is no room in Economics for a long chain of deductive reasoning.The nature of the services provided by mathematics and their limitations. The inductive method gathers relevant materials of all kinds, arranges them, and deduces general principles or laws by means of analysis and deduction.Then the deductive method once again plays the main role.It connects these principles with each other, temporarily finds a new and broader principle or law, and then calls induction to mainly share the work of collecting, selecting and arranging these materials in order to test and "prove" this new law.

Clearly, there is no room in economics for a long chain of deductive reasoning.Economists, like Ricardo, did not even try to do this.The frequent use of mathematical formulas in economic research may at first appear to claim the opposite; however, after research we have found this claim to be false, except perhaps where a theoretical mathematician uses economic assumptions for the sake of mathematical games , because then he was concerned with demonstrating the potential of the method on the assumption that economic research had provided material amenable to the mathematical method.He is not technically responsible for the material, and is often ignorant of how it is insufficient to bear the strain of his mighty machine.But mathematical training helps to articulate in extremely succinct language certain general relations and certain brief processes of economic reasoning which, though expressible in ordinary language, cannot be expressed with equal clarity.More importantly, experience in the mathematical treatment of physical problems has given us a deeper understanding of the interaction of economic changes than can be gained by any other method.The direct application of mathematical reasoning to the discovery of economic truths has lately been in the hands of great mathematicians a great aid both to the study of statistical means and chance rates, and to the measurement of the degree of agreement of related statistical tables.

Section 2. Independent thinking is the main force in scientific work; its function is not to formulate abstract hypotheses, but to connect the complex influence of real economic forces at work on a wide range. If we close our eyes to reality, we can use our imagination to build a crystal edifice, which will indirectly illustrate real problems; and may be of interest to those who have absolutely no economic problems like ours.This kind of game often has unexpected value.It enlightens the mind, and seems to bring good only if its purpose is clearly understood. For example, the assertion that the dominance of money in economics derives from its being a measure of motivation rather than an end of effort may be explained by the hypothesis that this special use of money as a measure of motivation may be said to be a Accidents, perhaps peculiar to our world.When we try to entice someone to do us a favor, we usually give him money.It is true that we may appeal to his generosity or his sense of duty; but this involves calling on the underlying motives already present, not supplementing new ones.If we have to add a new motive, we generally consider how much currency it takes to make something worth doing.It is true that sometimes gratitude, esteem, or honor, which acts as an inducement to action, can manifest itself as a new motive, especially if it can be crystallized into a certain concrete image; like, for example, the right to use the word Bachelor, or the wearing of the Order of the Star or the Highest Order of Knighthood.These honors are relatively rare, and relate to only a few events; they do not serve as the measure of those common motives which govern man's ordinary actions.But political merit is usually rewarded with these honors, and seldom otherwise.In this way we gradually accustom ourselves to measuring them in honors and not in money.Let us suppose, for example, that A, for his services to the interests of his party or state, is duly remunerated as a knight, as the case may be, which obviously does not repay B, who has acquired the baronetship.

It is possible, perhaps, that there are worlds in which no one has heard of private ownership of material things, or of wealth as generally understood;If these honors were transferable to one another without the intervention of external powers, they would serve as a measure of motivational power as conveniently and precisely as money is to us.In this world, with little mention of material things and no mention of money at all, there could be written works of economic theory similar to ours. It may seem trivial to insist on this, but it is not.For false associations arose in the minds of the economically dominant measure of motivation and of the extreme emphasis on material wealth at the expense of other higher ends.The only condition required for the measure of economic motivation is that it should be something definite and negotiable.It is actually convenient for it to take a physical form, but not necessary.

The third section continues. It is a good thing to engage in abstraction, if limited to appropriate scope.The breadth of those human economic motives which economics discusses has been underestimated by some economists in England and elsewhere; the German economists have contributed by emphasizing it.But they seem to have mistaken the granddaddy of British economics for ignoring it too.Little do they know that it is an English habit to leave a great deal of leeway for the reader's common sense to supplement; and on such occasions an excessive reticence often invites misunderstandings at home and abroad.This reticence has also led to the perception that economics is less grounded and less connected to real life than it really is.

For example, too much attention has been paid to Mill's thesis that "political economy regards man as a man specially engaged in acquiring wealth and consuming it" (Essays, p. 138, Essays, 6 Chapter Nine, Section III).What is forgotten, however, is that he was there in terms of an abstract discussion of economic problems which he once conceived but never realized, preferring to write Political Economy and Some Implications for Social Philosophy. Application" book.Also forgetting, he goes on, is that "perhaps there is no action in a man's life which is neither directly nor indirectly affected by any motive other than the pursuit of wealth"; In discussing economic issues, he often takes into account many motives other than the pursuit of wealth (see above, Appendix II, Section VII).However, his discussion of economic motives was inferior in substance or method to those of the German economists of his day, especially Hermann.

In the third section of the third chapter of Knys' "Political Economy" there is such an instructive The thesis, that unpurchasable immeasurable pleasures vary from age to age, and have a tendency to increase with the progress of civilization; British readers are referred to Syme's Outline of Industrial Science. It seems necessary here to point out the main items in the analysis of economic motives in the third edition of Wagner's magnum opus.He divided economic motives into two types: self-interested motives and altruistic motives.There are four self-interested motives: The first and often active motive is the pursuit of personal financial interests and the fear of personal financial difficulties.Followed by the fear of punishment, and the hope of reward.The third is a sense of honor, and striving for recognition, which includes seeking the appreciation of others and fearing shame and contempt.The last egoistic motive is the desire for occupation, and the pleasure of activity; and the comfort of the work itself and its surroundings, including the "pleasure of hunting."The altruistic motive is the "impulse of the inner command to do good, and the pressure of a sense of duty, and the fear of personal condemnation, that is to say, of the condemnation of conscience. In its pure form, this motive appears as the 'categorical imperative', the To obey it is because one feels inwardly that one has a command to behave in one way or another, and that this command is right... There is undoubtedly pleasure in obeying the command, and pain in disobeying it. These feelings are in Often it is as strong, if not more so, than the imperative to drive us on, or to participate in the drive to continue or cease action. As such, the motive itself has an egoistic element, or at least dissolves it. into one".